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Jon defends in the state and federal courts in Fairfax, Northern Virginia, and beyond, including courts in Fairfax City, Arlington, Falls Church, Alexandria, Prince William and Loudoun County. Criminal defense is about defending people and upholding civil liberties. Se habla español. On parle français.

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NOTE: CASE RESULTS DISCUSSED IN THIS BLOG DEPEND UPON A VARIETY OF FACTORS UNIQUE TO EACH CASE, AND DO NOT GUARANTEE OR PREDICT A SIMILAR RESULT IN ANY FUTURE CASE UNDERTAKEN BY OUR LAW FIRM.Va. R. Prof. Cond. 7.1(b).

Monday, May 20. 2013

By Jon Katz, a criminal defense lawyer and DWI/ DUI/ Drunk Driving lawyer advocating in Fairfax County, Virginia, Montgomery County, Maryland, and beyond for the best possible results for his clients. http://katzjustice.com

When commission payments are essential expenses of illegal activity, the payments of such commissions does not constitute money laundering. U.S. v. Abdulwahab, __ F.3d _ (4th Cir., April 29, 2013), slip op. at 17.

The main reasoning of Abdulwahab follows:

Abdulwahab’s case creates a merger problem very similar
to that present in Cloud. The money laundering counts at issue concerned
commission payments to HIC sales agent Tim Bromseth. These payments, like those
in Cloud, were for services that played a critical role in the underlying fraud
scheme in that it was the promise of payment for services rendered that enticed
HIC and Bromseth to obtain investors for A&O. As such, Abdulwahab was no
different than "the felonwho uses the stolen money to pay for the rented
getaway car or "the initial recipient of the wealth" in
"any wealth-acquiring crime with multiple participants . . . [who] gives
his confederates their shares." Id. at 404 (quoting Santos, 553 U.S. at
516). Unlike the transactions in Halstead, the commission payments were
essential expenses of the illegal activity. Thus, the merger problem we
identified in Cloud arises in this case as well, and, following Cloud, we
correct it by defining "proceeds" as "net profits." See
id.at 409. Under this definition, while payment of the commissions may have
constituted evidence of the fraud underlying the money laundering charges, the
payments did not constitute money laundering. We therefore hold that the district
court erred in rejecting Abdulwahab’s contrary argument and denying his motion
for judgment of acquittal as to those counts.8

Abdulwahab, slip op. at 17.

The above-referenced footnote 8 in Abdulwahab’s says:

After
the Supreme Court decided Santos, Congress amended the money-laundering statute
to specifically define "proceeds" as "any property derived from
or obtained or retained, directly or indirectly, through some form of unlawful
activity, including the gross receipts of such activity." Fraud
Enforcement and Regulatory Act of 2009, Pub. L. No. 111–21, § 2(f)(1), 123
Stat. 1617, 1618 (2009) (codified at 18 U.S.C. § 1956(c)(9)). With
"proceeds" now specifically defined, the issue we address today should
not recur in many future cases. See Cloud, 680 F.3d at 409 n.6.

Abdulwahab, slip op. at 17, n.8.

ADDENDUM: The closest I ever came to being a cop was my year before law school as a financial auditor at a large Wall Street commercial bank. Early on, among our duties, we were taught to monitor for violations of the money laundering laws, by verifying that IRS Form 8300 had been properly filed for cash transactions over $10,000, and that multiple deposits by the same customer were not being used to circumvent the money laundering laws. Later on, one of my department's vice presidents, a very colorful man, did a training presentation on money laundering, and spoke of the law's focus on drugs, which I felt was a waste of time and resources for the criminal law to focus on. It was 1985, in the midst of Nancy Reagan's oversimplified "Just Say No to Drugs" campaign (easier for many to say about cocaine and heroin, but how about valuum and percodan?).

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